How About an Adjustable Rate Mortgage

Adjustable rate mortgages are sometimes confused with graduated payment mortgages. With a graduated payment mortgage the interest rate remains fixed while the payment amounts change.

Margin - the part of the interest rate from which the lenders profits. The margin plus the index rate is the total interest rate. While the index will change throughout the duration of the adjustable rate mortgage, the margin will not.

The index is one of the most important considerations in choosing an adjustable rate mortgage. Even though you don't have control over the specific index that is used by a particular lender, you can choose a loan and lender according to the index that will apply to the particular loan in which you are interested.